2. Debt Ratio 3. Interest coverage ratio 4. Accounts receivable turnover 5. Inve

Question

2. Debt Ratio

3. Interest coverage ratio

4. Accounts receivable turnover

5. Inventory turnover

6. Total asset turnover

7. Return on assets

8. Return on equity

9. Earnings per share

10. Price-earnings ratio

Which company's stock better fits your investment strategy?

Data Table 2 tion: Selected balance sheet and market-price data at end of current year follow: 5 e Built Strong, Inc. Strong Home, Corp you a Home ick the ick the estme d all ot 'Current assets: 23,000 33,000 36,000 76,000 9,000 177,000 263,000 59,000 102,000 59,000 42,000 23,000 77,000 6,500 207,500 259,000 26,000 94,000 2,000 Short-term investments. . . e requ k ratio he for Total liabilities, orp. $4.00 par, 4,000 shares 16,000 161,000 60 ratio 165,000 Market price per share of common stock. . . . . . . . . . 76 Print Done

Explanation / Answer

Which company's stock better fits your investment strategy?

STRONG HOMES, because its position is better as compared to built homes on an overall basis

RATIOS BUILT STRONG INC STRONG HOME CORP 1) Quick Ratio = a) (Cash + Cash Equivalents + Short Term Investment + Current Recievables) 92000 124000 b) Current Liabilities 59000 26000 Quick Ratio [a/b] 1.559 4.769 2) Debt Ratio a) Total Liabilities 102000 94000 b) Total Assets 263000 259000 Debt ratio [a/b] 0.388 0.363 3) Interest Coverage Ratio a) Earnings Before Interest & Tax (EBIT) 88000 103000 b) Interest Expense 18000 11000 Interest Coverage Ratio[a/b] 4.889 9.364 4) Account Recievable Turnover a) Net Credit Sales ( all sales assumed on credit) 995000 1018000 b) Average Account Recievable 38500 26000 Account Recievable Turnover[a/b] 25.844 39.154 5) Inventory Turnover a) Cost of goods Sold 102000 134000 b) Average Inventory 86000 80500 Inventory Turnover[a/b] 1.186 1.665 6) Total Asset Turnover a) Net Sales 995000 1018000 b) Average Total Assets 257500 233000 Total Asset Turnover[a/b] 3.864 4.369 7) Return on Assets a) Net Income 84000 105000 b) Average Total assets 257500 233000 Return on Total Assets[a/b] 0.3262 0.4506 8) Return on equity a) Net Income 84000 105000 b) Average Stockholder's Equity 140500 160000 Return on Equity[a/b] 0.598 0.656 9) Earnings Per Share a) Net Income 84000 105000 b) No of Shares 4000 2000 EPS[a/b] 21 52.50 9) Price earning Ratio a) Market Price 60 76 b) EPS 21 52.50 P/e Ratio[a/b] 2.857 1.448

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